Britain's leading index slipped 0.8% yesterday on the back of weak mining and energy stocks.

The FTSE 100 was down 33.34 points at 4,405.22, after having closed up 51.62 points on Friday after better-than-expected US jobs data.

The index is still up more than 25% since slumping to a six-year low in March, but a return to caution over the economic outlook has prompted investors to lock in profits.

Bob Doll, vice-chairman and chief investment officer for global equities at fund manager BlackRock, said: "While investors have grown more optimistic in recent months in the face of less bad economic news, it is important to remember that less bad is not the same as actual good news.

"As such, we believe the rally that started in early March may run out of steam unless there is more solid evidence of an economic recovery.

"We believe equities are entering a sideways correction phase, and we also expect to see ongoing levels of high volatility.

"We think it is extremely unlikely that prices will retreat back to their early-March levels, but we could see some modest near-term declines, since markets never move straight up."

Mining companies were among the biggest fallers. Anglo American dropped 87p to £17.83 and BHP Billiton fell by 60p to £14.94.

Yesterday's biggest loser was Lloyds, which fell by nearly 8% to 61.1p even though the bank said it would be repaying nearly £3bn to the government. Lloyds will be the first bank to pay back part of its bailout.

The biggest gainer in the FTSE 100 was British Land, which closed down 8.75p points at 384.5p. The rise in the property investor was mainly down to Halifax saying last week that the average price of a house in the UK rose by 2.6% in May, the biggest monthly rise in more than six years, which prompted hopes that property prices may have reached a bottom.

BSkyB also saw its shares rise on the news that its rival pay-TV company Setanta could go bust. The shares closed up 8.75p at 459.87p.

The biggest loser in the FTSE 250 was mining company Hochschild, which closed down 24.25p at £19.07. Overall, the index was down 59.47 points at 7,687.86.

As Britain's markets closed, US indexes were down as the market was waiting for the US government to announce which banks would be allowed to repay funds received under the troubled asset relief program (Tarp). Investors were also worried that rises in interest rates could stall any recovery.

The Dow Jones Industrial Average had shed 85.25 points to 8,677.82 and the S&P 500 was down 8.1 points at 931.99.